BEIJING (Reuters) - Only China's yuan could rank with the dollar and euro as pillars of the global monetary system, given time and five key tests, Hong Kong's former Monetary Authority chief Joseph Yam was quoted as saying.
China is the world's second largest economy, yet it exercises tremendous capital control including restrictions on its currency, the renminbi. Chinese officials have previously said that they want to make the currency fully convertible by 2015.
The rise of the euro and China's yuan will likely spell the end of the US dollar's dominance of the global financial system by 2025, a World Bank study released Tuesday concludes.But it also said the the International Monetary Fund's basket-based pseudo-currency, the SDR or special drawing right, could also gain weight as countries and businesses seek to reduce the risk of foreign-exchange shifts.
Marc Chandler submits:There will not be a statement after this weekend's G7 meeting, but officials will likely take to the microphones and wax on global developments and their pet issues. Host Canadian Finance Minister Flaherty says that foreign exchange issues will be discussed, but this seems to be normally the case, especially given that central banks will be represented.It was up to Japanese Finance Minister Kan to provide a specifics. He said that the Chinese yuan may be debated.Really? Debated?
I really can’t figure out which currency is something I would want to hold if I had the option. It doesn’t really matter, since I am not going to act on it in a very direct way (maybe if I felt very strongly I would do something but it would probably be pretty limited), but I still keep thinking about this issue out of curiosity.
Dr. Stephen Leeb submits:The big news this past weekend was China's decision to let its currency, the yuan, trade with more “flexibility” - in other words, higher. As you know, we've been expecting such a move for some time, but with more dread than optimism. Nonetheless, this slight change is no reason to panic.
Hao Jin submits:Traditionally, China is blamed for holding its currency at an artificially low level to spur exports. If the yuan appreciates, it would be bullish for everybody but China, because there will be more exports and higher growth in the Europe and US. But it could also lead to higher prices on Chinese goods imported to the US, causing inflation and leading the Fed to hike interest rates sooner. China couldn’t function without massive orders from the US. The U.S.